Leveling the Playing Field - Leveling with the Citizenry

Leveling the Playing Field - Leveling with the Citizenry

In the effort of full disclosure, I supported the election of President Obama, both with time and with money. I am disappointed that he has not done more with his short moment in history, but, as the excellent recent article by Matt Bai in the New York Times pointed out, perhaps this era of globalization, is also the era of the diminished power of the presidency.

Nevertheless, even if the power of the President in this new world is limited, whether President Obama is to be a one term president or not, he has the opportunity – perhaps the responsibility - to use his moment in history to distinguish and define his presidency by being the president who, with honest dialogue, uniquely leveled with a citizenry that feels confused and betrayed.

Instead of promising jobs for Toledo factory workers whose work has been outsourced to low wage countries in Asia, perhaps he should level with them and say the jobs are not coming back. Perhaps he ought to trust in his own sense of honesty, good faith and fairness, and courageously take his responsibility as President to openly educate a confused and increasingly polarized citizenry in what this new globalized world really means for the alienated US middle class.

As the leader, the President has the responsibility to educate and explain to the citizenry that in a world where capital knows no territorial boundaries, the present moment is about an ongoing leveling of the world economic playing field, a field on which for centuries past, the rich countries and less rich have competed, with the United States as one of the “winners” over the last century.

The President has the opportunity to acknowledge the suffering of the middle class in their palpable feelings of having been betrayed in their belief in a system that seems to have let them down. He has the opportunity to educate and explain why this current leveling of the playing field cannot be stopped and possibly not be constrained, by the actions of state actors, whether they be the actions of the nation’s democratically elected president or the nation’s democratically elected legislature.
The President has been accused of not feeling the pain of the American middleclass. He has the opportunity to openly acknowledge their pain by letting the middle class know that he is aware that during the three decades after World War II almost 3 percent a year the— for people at all income levels and that America had an economically vibrant middle class and that people had “hope.” That he knows, as recently reported by New York Times columnist Robert Frank, that during the last three decades all significant income growth has been concentrated at the top of the scale. The share of total income going to the top 1 percent of earners, which stood at 8.9 percent in 1976, rose to 23.5 percent by 2007, while during the same period, the average inflation-adjusted hourly wage declined by more than 7 percent.
Thus, at a time when we are witnessing a dramatic rise in the value and concentration of US capital, the value of that which the US middle class has historically been proud of as its contribution to the economy – its labor - has been marginalized. In this globalized world, what formerly were US middle class jobs have been outsourced to low wage countries, thereby marginalizing the value of American labor and generating an average of 10% unemployment.

In the international arena, the world economic power of China, politically, totalitarian regime based on a model of state capitalism is now only second to that of the US, whose model has been based, politically, on representative democratic leadership and economically on private enterprise.

President Obama has the responsibility to explain that capital, when combined with the real time technological opportunity to be invested anywhere in the world at the click of a mouse, knows no geopolitical boundaries, and may be invested anywhere in the world, regardless whether the investment is in a private enterprise based democratic society or a state capitalist totalitarian society. He has the opportunity to explain that because the forces of the power of capital have become global, the result is that possibility of exercising that economic power on the basis of individual nation state action, is fast becoming an anachronistic concept. Although such an open acknowledgement and discussion may lead to a possibly dangerous dialogue on the question of whether the democratic bases for managing civil societies may also not have become anachronistic, these are dangerous times, and they call for honest, bold and courageous engagement of our citizenry by our elected leaders, so that we can engage in an open discussion of possibly new paradigms.

It has recently been reported that commencing 2012, the European Union will charge US based airlines with greenhouse gas emissions fees when they take off and land in Europe. The US does not have similar environmental laws but it cannot stop by US national action the EU’s implementation of these new rules on US carriers. In paying the EU penalty, the failure of US airlines to adopt the EU’s environmental rules will have adverse economic consequences as US airlines seek to compete with the airlines that have adopted those rules. The matter has been submitted to a branch of the United Nations for consideration.

In September 2010, agreements were reached by the world’s major financial institutions, represented by the “Basel Committee on Banking Supervision,” who met in an effort to implement global-wide uniform rules to which financial institutions would subscribe in an effort to minimize the chances of another international financial market meltdown.

The group of financial institution representatives from 27 countries included Ben Bernanke, chairman of the US Federal Reserve. These rules, known as the “Basel III” accords, are subject to approval by the group of G-20 nations, and then enactment by individual nations, before they become binding.

These are just two recent examples, where global actors – whether the European Union, international airlines or international financial institutions – are influencing -- or maybe even taking the lead from – what have traditionally been in the purview of regulation by national actors. In a globalized economy, responsibility for the regulation of economic matters is less and less possible of regulation by national legislatures and national executives.

As capital, the unleashed “prime mover” of this period in history, moves instantly around the world, to settle wherever it has the potential of greatest economic return given the amount of risk the investor is willing to take, there must be the beginning of an honest discussion of the power (and maybe even of the relevancy) of democratically elected nation-state legislatures and democratically elected executive leaders. By extension, such a discussion may soon lead to an opening of the discussion of the relevance of the citizen electorate. I suggest that it is this sense of economic and political irrelevance among the US middle class, where neither their economic contribution of labor nor their political contribution of their vote has relevance for their lives, that has resulted in a US middle class feeling confused and betrayed.

There is an angry citizenry in our land. It is no wonder they are angry. No one has explained to them why their jobs were sent overseas or why the value of the only economic component they have to contribute – their labor – has been marginalized by their human effort being replaced by machines or by the labor of others, willing to work for lower wages. Those lower wages overseas become the bar by which the value of their own labor is measured by corporations – many being US corporations operating overseas or their contractors – who can proudly report to their capital investors that they have improved corporate earnings, by reducing the cost of labor.

No one has explained to the citizenry why financial institutions, insurance companies, and automobile manufacturers – the latter of which now sell more cars and employ more workers in China than in the US - were deemed “too big in value to the system to fail.” No one has explained why their government found it necessary to use middle class tax dollars to prop up the failed commercial institutions, in what they have been told and believed was a “free market system” in which their labor mattered. No one has explained why it appears that the value of their only possible contribution to the US economy- their labor – has been marginalized as apparently “too small in value to the system to care about.” No one has explained to the middle class workers why the same financial institutions that their middle class tax dollars propped up, are allowed to use deceptive practices to take away their homes in foreclosure, when they are unable to pay their mortgages because they have lost their jobs to foreign laborers working for businesses financed by the investment of US capital overseas. It is no wonder that the populace is confused and feels betrayed by their belief in a system which seems to have failed them.

The anger of our citizenry has made it ripe for manipulation by demagogues in populist clothing, who wave the red flag of “the other” before them. This includes the recent insidious racist remarks by Republican “leader” Newt Gingrich in his embarrassing efforts make our own president appear to be “the other.”

Efforts to divide rather than to bring us together to face these critical challenges have included politically manipulative harangues about eliminating US dependence on “Arab oil” – the “Muslim other.” A clear headed honest discourse would show that the US gets the largest amount of oil from Canada (2 million barrels per day), and, in fact, that among the top 5 foreign sources of US oil, it gets 5million barrels per day from Canada, Mexico, Nigeria, and Venezuela combined, and only 1 million from Saudi Arabia. Think, however, how much more complicated it would be to rile the citizenry to “stop US dependence on Canadian oil,” when the only way to tell the difference between a Canadian and an American is to get them to pronounce the word “out.”

The anger of the citizenry has also been directed to “the other” in the form of undocumented workers, who work in our lettuce fields and orchards, and clean our homes, taking low wage jobs for which there is low domestic demand. An honest dialogue would address the documented fact that these are jobs which our citizenry will not do, and that these foreign workers’ acceptance of wages that we would not accept, permits us to eat our low cost oranges and lettuce.

Perhaps in these confusing times, when Americans are wondering why American soldiers have to die and be maimed and have their families’ torn apart because of our efforts in a corrupt Afghanistan, our leadership should educate with a discussion of the need international energy security.

The American citizenry is angry. It is angry because no one has explained the rules of the new game called “globalization,” where we are all linked together; where the resulting economic forces are redistributing economic value worldwide, the economic value that the US middle class once believed that through their labor they could earn to make a more secure life for their families, and the families of their children. That was the American dream.

No one has explained that we are all caught up in a historical irreversible process where the jellybeans that were previously in a jar with the label “US” are being redistributed beyond our borders. No one has begun the dialogue to educate and inform that this process may be beyond the control of state actors – including, to a large degree, the nation’s chief executive, and perhaps even more significantly, beyond the control of the elected representatives of the citizenry, or the citizenry themselves.

More and more the major decisions which impact each of our lives are becoming outside our control. They are becoming “global” decisions and outside the control of individuals and even increasingly outside the control of our national institutions and national leaders. The result is a feeling of powerlessness, especially on the part of the increasingly marginalized US middle class. The polls consistently show the citizenry’s lack of faith in its government institutions – both in its elected executive and, more importantly, in its elected legislative representatives.

Perhaps President Obama will distinguish himself and his term in office, however long it may be, by having the courage to take the citizenry into his confidence, and to trust the American people with the truth about how and why this now globalized world impacts on the lives of the citizenry, including the question of the future relevance of democracy and its institutions.

"We are not bound to succeed, but we are bound to let whatever light we have shine.”

Please read the rest of today's editorial here: http://www.nytimes.com/2010/03/22/opinion/22krugman.html?emc=eta1


March 22, 2010
Op-Ed Columnist
Fear Strikes Out
By PAUL KRUGMAN

The day before Sunday’s health care vote, President Obama gave an unscripted talk to House Democrats. Near the end, he spoke about why his party should pass reform: “Every once in a while a moment comes where you have a chance to vindicate all those best hopes that you had about yourself, about this country, where you have a chance to make good on those promises that you made ... And this is the time to make true on that promise. We are not bound to win, but we are bound to be true. We are not bound to succeed, but we are bound to let whatever light we have shine.” ...